The perquisites of office

by Henry Farrell on March 24, 2008

Andy Gelman “links to”: a “new paper”: on money and UK politics. The abstract speaks for itself.

While the role of money in policymaking is a central question in political economy research, surprisingly little attention has been given to the rents politicians actually derive from politics. We use both matching and a regression discontinuity design to analyze an original dataset on the estates of recently deceased British politicians. We find that serving in Parliament roughly doubled the wealth at death of Conservative MPs but had no discernible effect on the wealth of Labour MPs. We argue that Conservative MPs profited from office in a lax regulatory environment by using their political positions to obtain outside work as directors, consultants, and lobbyists, both while in office and after retirement. Our results are consistent with anecdotal evidence on MPs’ outside financial dealings but suggest that the magnitude of Conservatives’ financial gains from office was larger than has been appreciated.

Andy isn’t sure about the substantive impact that this has for political science, given the disparities between the amounts of money that flows through politicians’ hands in functioning democracies and the amounts of money that they may personally derive from office. I’m not so sure about that, as the monies sticking to politicians’ hands do likely help shape their incentives (e.g. one can plausibly speculate that Tories who rock the boat too much aren’t going to have much luck cashing in on those directorships), but, in any event, the fact that Andy doesn’t spot any obvious methodological problems makes me at least think that the observed effect is likely real.

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03.24.08 at 12:02 pm



shteve 03.24.08 at 3:38 am

Does this mean Tony Blair was a Conservative?


a very public sociologist 03.24.08 at 8:50 am

Shteve’s comment is suggestive of something. I suspect the observable effect on Labour MPs’ estates will change when the current crop of Blairite/Brownite MPs are interned in their golden sarcophagi.


Dave 03.24.08 at 8:58 am

Blimey, pope in Catholicism shock!

Breaking news on ursine sylvan defecation next!


dsquared 03.24.08 at 10:39 am

ach, it’s more of this “quasi-natural-experiment” methodology, of which I am not a fan. Not as bad as the “assassin’s bullet” paper discussed in comments to my thread below (because it’s a bigger and probably more homogeneous sample), but there’s a heck of an issue with whether the result of close elections is really random in the sense they need (my guess is that most narrow defeats came in formerly safe seats during landslides for the other side, as in 1997, and a lot of more successful politicians timed their retirements ahead of these results).

And also, having a major setback in the middle of your career is always going to be bad for terminal wealth. People standing for Parliament give up their jobs to campaign (Labour politicians, historically, less so, because they have tended to come from the ranks of paid Trade Union officials) and if you then don’t get elected, you’re in shtuck. I’m sure that a lot of nest-feathering goes on (and the revolving door approach of Patricia Hewitt and Alan Milburn etc is genuinely disgusting) but I am not a fan of this methodology, even when it produces conclusions I agree with.


Nick 03.24.08 at 11:18 am

Shteve’s comment is suggestive of something. I suspect the observable effect on Labour MPs’ estates will change when the current crop of Blairite/Brownite MPs are interned in their golden sarcophagi.
Shurely ‘interred’? If they’re to be banged up in luxurious houses of the civil dead at the taxpayer’s expense I’d hope they’d at least be afforded the benefit of due process . . .
More seriously, at least one Cameroony-fan of my aquaintance objected to the 1997 Blair ascendancy precisely on the grounds that it opened the golden portals of graft to quite the wrong sort of person . . .


dsquared 03.24.08 at 12:41 pm

I’d also note that the current political system has a load of people like Neal Lawson, Derek Draper and Jon Mendelsohn, who have never dreamed of standing for election as MPs, but who are nevertheless going to have substantially larger inheritance tax bills as a result of making commercial use of their political connections.


harry b 03.24.08 at 3:19 pm

I’m with daniel. Standing for winnable-but-not-safe seats is a high risk, and for the reasons daniel give it was a bigger risk for Tories in the period studied than for Labour. Especially if (and this is a guess) Labour candidates in relevant seats not working for Trades Unions at the time would have been younger, on average (so that it is more a resume-building activity than a risk).


kb 03.24.08 at 4:27 pm

And what was the nature of the assets in the estates of the tory members?

If the tory members were richer than the labour members, then it’s entirely possible that the tory’s bought either a house in the constituency or in london, whereas the poorer labour mps might be renting their equivalent. Now if you bought an extra house in london in the time period 1950-1970 and then held onto it for 20 years or so then i would suggest you’d see a difference in the estates between those who didn’t need to versus those who did ?

Or how about losing tory candidates tended not to come from the south of england where property values rose faster than the rest of the country?


dsquared 03.24.08 at 6:30 pm

Not sure #9 is an objection so much – Tories who stood at elections and didn’t get in would also have been likely to buy property, wouldn’t they?


kb 03.24.08 at 7:18 pm

“Not sure #9 is an objection so much – Tories who stood at elections and didn’t get in would also have been likely to buy property, wouldn’t they?”

The point i was trying to make was that if you’re a successful tory candidate in the 1950-70 era , and you live in your seat , then when you win the seat you’ll need to have somewhere to live in london and if you’re already quite successful financially you would be more likely to buy a house/flat in london than your labour equivalent.

Roll on 20-25 years and the rise in London prices could go a long way to explaining the differences in the value of the estate.

If you didn’t win the seat then you wouldn’t need to buy a place in London,and so it wouldn’t show up in your estate.


DM Andy 03.24.08 at 7:31 pm

A possible reason for the observed effect is that being an MP for the governing party is more lucrative than being an MP for the opposition.

The study considered all MPs elected between 1950 and 1970, a period when the Tories were in government for 13 of the 20 years. Some of the MPs in the study would have been in Parliament much earlier and later. Edward Turnour was elected for Horsham in 1950 having first been elected in 1904 and there’s at least eight successful 1970 candidates still in the House of Commons now.

As Conservatives have been in government for the majority of the last 104 years, is it not more reasonable to say that Government MPs become richer?


bernarda 03.25.08 at 9:44 am

I wonder how MPs’ investments are doing nowadays. A few years ago a few got burned(or did they)with the Lloyds’ crisis. Did some have holdings in Northern Rock or Bear Stearns?

OT, but I missed out on your baseball comments. Still, you might like these comments by George Carlin comparing baseball to American football.


DBX 03.25.08 at 8:20 pm

As that guy at the campaign rally in Chester in 1997 yelled out, “You’re a Tory!!” To which Peter Mandelson is said to have said, “oooh, get the cameras on him, it’ll be worth at least a thousand votes.”

And now, thanks to the wonders of statistical analysis and empirical reality, we know — Blair indeed was the ultimate Tory plant in the Labour Party.

But don’t expect this relationship to hold up as the entire Labour front bench now at long last have first hand experience of how to enrich themselves.


mc 03.29.08 at 10:16 pm

The conservative party used to, and still do, think of themselves as an a-political party, the natural party of government in the UK, the useful party, the common-sense party. It’s little surprise that conservative MPs (who have had better education, social standing etc. during the last century), are in high demand by the Britain’s inherently conservative institutions after they leave office, and have acquired nice sinecures. Labour is hardly a one-stop-shop for talented _and_ compatible individuals not likely to upset things… you could pick up Trade Union types [e.g. Prescott] or crooks [e.g. Mandelson], or astronomical failures, [e.g. the above + Estelle Morris].

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